Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

May 2016

05/31/2016

"There's an option for old people in Missouri who need in-home care but make a little too much money to qualify for the state's home help program."

The St. Louis Post-Dispatch recently reported in "Trusts sidestep Missouri income limit for home care" that the Missouri Department of Social Services now recognizes Qualified Income Trusts, also known as Miller Trusts. This type of trust is a workaround for a rule that requires some people to live on $841 a month but allows others to make $1,280 while getting the same in-home help.

This in-home help can help some seniors avoid nursing homes. However, it's hard to keep a private home going on $841 a month. The issue involves people who are at least 63 years old and who meet the state's medical standards for receiving in-home help, which is help cleaning, cooking, and other daily functions.

Miller Trusts have been used for many years in other states. However, elder law attorneys in Missouri ran into difficulty getting their state's officials to accept Miller Trusts. Nevertheless, this has recently changed, they claim.

Those who apply for in-home help can only have so much income; those who bring in less than $1,281 a month will qualify. However, if you earn a dollar more than $1,281, you have to pay for your own help until you have only $841 a month left. So it amounts to a $440 monthly penalty for income $1 over the limit!

But a Miller Trust can hold the amount over $1,281 because money in the trust does not count as income. A senior can then satisfy the $1,281 income cutoff and won't have to spend an extra $440 to qualify for home help. He or she can't just keep the money in the trust, however, but must spend it each month for medical needs: a wheelchair, doctor and hospital bills, drugs, and medical supplies.

The Miller Trust solves the basic numbers problem: a senior cannot buy food and clothing and pay utilities, rent or real estate taxes, and medical expenses on $841 a month. That kind of rail-thin budget pushes people toward nursing homes.

Note that a trust is not easy to set up. You need to hire a lawyer and get your bank to accept a small trust account. Typically, small community banks will help, but not the big banks. The senior will not have control of the money in the trust. Instead, it will be in the hands of a trustee, usually a close relative.

Miller Trusts are commonly used in other states that require a spend-down for home help. Somehow, Missouri social services officials had never heard of them.

However, the department spokesperson said, "The Department of Social Services has accepted Miller Trusts for the Home and Community-based services program for a number of years. However, Missourians rarely used it until recently. Due to the sudden increase in demand, it became necessary to establish a better process to handle the higher number of Miller Trusts. Initially, there may have been some confusion, but we have worked through it and apologize for any inconvenience it may have caused."

05/30/2016

"Inheriting an estate can be an emotional journey, especially if you had a close relationship with the person whose estate you are settling or if you're planning an estate sale due to divorce or foreclosure."

Get advice. Don't take on this responsibility alone. As you begin the process of selling the contents of an estate, find yourself a support system. This can include members of your family, friends, and experts (like an estate planning attorney). These folks can provide you with valuable advice, and you may feel more comfortable when you've considered input from others. Given that this is an extremely emotional experience, you might also want to talk with a member of the clergy or a counselor as you go through the steps of preparing for the estate sale.

Get ready for memories. There can be times of grief that will pop up unexpectedly, and in some instances, simply seeing certain items will trigger special memories. Sorting through some household items might appear to be a simple and unemotional task. However, it can be tough when you come across something that you associate with a memorable occasion. Be prepared to find items that may cause a moment of pain. Even so, try to balance this with happy memories when you can. While this isn't always easy, concentrating on positive feelings can be a critical part of staying strong throughout the process.

Get ready to take your time. Although it may not be possible, try not to rush through the planning stages for the estate sale. Make wise decisions on what to sell, what to keep, and what to donate—as you want to avoid any regrets in the future. Preparing for an estate sale offers a measure of closure, but this process can also cultivate feelings of finality. Allow yourself time and space to consider your options to reduce the emotional burden.

Get help. An estate sale service can eliminate much of the emotional pressure that comes from the estate sale process. This way you don't have to focus on details that aren't really your area of expertise, such as pricing, staging, and scheduling. This will let you have the freedom to channel your energy into emotional healing. In addition, this professional assistance can lessen the burden of decision making, which can be helpful.

Here are the six key documents you should have to protect your assets and your family in the event of your passing:

Beneficiary Forms. This indicates who gets the assets in your 401(k)s, IRAs, life insurance policies, pensions, and other financial accounts upon your death. These designations take priority over the directives in your will, so keep them up to date.

POD and TOD Designation. A payable on death (POD) form typically says who should receive the money in your checking or savings accounts when you pass away. A transfer on death (TOD) form is similar but typically for brokerage accounts. A TOD deed says who takes over the deed to your home after you die.

Durable Power of Attorney. This important document designates a person to make health care or financial decisions for you if you become incapacitated or unable to make them for yourself.

Living Will. This is also called an Advance Health Care Directive. It details the way in which you want your doctors to treat you should you become unable to communicate those wishes.

Will. This outlines how you want your probate assets divided, as well as who should become guardian of any minor children.

A Living Trust. This document, like a will, says how you want your property and funds distributed and who will take care of your minor children. It also appoints a trustee to carry out specific wishes for your assets. Unlike a will, assets held in a trust don't have to go through probate. A trust can be used to help manage your assets and property while you're still alive.

By securing the help of a qualified estate planning attorney, you will leave a kinder financial legacy for your loved ones than Prince did for his family.

The U.S. Department of Justice has recently announced the creation of several Elder Justice Task Forces. The teams will target health care providers who commit crimes while serving the elderly, reports The National Review in a recent article, "DOJ Task Forces Target Elder Fraud in Health Care."

The Elder Justice Task Forces have a goal of coordinated, joint investigations to allow for quicker enforcement actions and prosecutions. These Task Forces combine federal, state, and local resources from law enforcement, the U.S. Department of Health and Human Services, state adult protective services agencies, long-term care ombudsman programs, U.S. attorneys' offices, state Medicaid fraud control units, and state and local prosecutors' offices.

The Task Forces will concentrate their efforts on investigating nursing homes that provide inadequate care to their residents. They also—in addition to looking into federal criminal charges for health care fraud—have the authority to enforce False Claims Act violations, HIPAA violations and state criminal laws.

Those corporations that are found to have violated the law will see significant monetary penalties, especially for repeat offenders. They could also face other penalties, such as possible debarment from federal programs like Medicare. Individuals who are caught committing crimes will also face imprisonment and fines.

The task force announcement is part of the Department of Justice's promise in its Elder Justice Initiative that all providers of services to the elderly will face increased scrutiny.

Particularly, this should be expected first in the jurisdictions designated for the initial 10 Task Forces: the Northern Districts of California, Georgia and Iowa; Districts of Kansas and Maryland; Western Districts of Kentucky and Washington; Southern District of Ohio; Eastern District of Pennsylvania; and the Middle District of Tennessee.

According to recent research, women in particular are often faced with this problem when their spouse dies. Women are also less likely to know the terms of their spouse's life insurance policy (57% versus 69% of men) and less likely to locate family financial documents in an emergency (32% versus 21% of men).

Make sure that your financial documents are in a place where they can be located easily when you die. Unfortunately, there's no law that says we have to make out a master list of where our assets are located. The deceased had to have independently made a list. Also, it's not unusual for assets to go undiscovered: grandma may have had a bank account in northern Minnesota or a timeshare in Hawaii. If there's no documentation, you'd never know.

The surviving spouse will often need important documents like tax returns, birth certificates, and insurance policies. So do your better half a big favor now and get organized.

05/24/2016

"An anonymous couple has bequeathed $1 million to their alma mater, Eastern Kentucky University, to support undergraduate student scholarships, according to a release from the school."

The Richmond (KY) Register recently published an article, "Anonymous couple bequeath $1 million to alma mater EKU," that details a bequest to Eastern Kentucky University. The bequest will fund a $500,000 endowed scholarship to help art or art design studio majors who are rising sophomores, juniors, or seniors. The recipient must maintain a minimum 3.0 cumulative grade point average and demonstrate financial need, as well as meet some other geographic criteria.

Another endowed scholarship of $500,000 from this same anonymous couple's estate plan will assist elementary education majors who are rising sophomores, juniors, or seniors who maintain a cumulative 3.0 GPA, demonstrate financial need and meet specific geographic criteria.

Both of the scholarships are renewable each semester, and the mysterious donor couple—one of whom is an elementary education graduate and the other an art grad—has requested large awards to cover half- to full-tuition scholarships in any given year, pending available funds.

"Our time at EKU was wonderful, some of the best times in our lives," the couple said jointly in a press release. "We feel so fortunate to be able to pay it forward."

The elementary education graduate said, "It is my hope that someone else fulfill his or her dream of becoming a teacher and become ‘that teacher' who makes all the difference in the life of a young child."

The spouse, who earned a degree in art, said, "Our gift is also in hopes that some budding designer or fine artist has the opportunity to fulfill their dreams, as I was able to do."

The school's vice president for development and alumni relations remarked that gifts like this are tremendously important and impactful. He added that endowed scholarships will benefit generations of students. Planned gifts also make other donors aware of a giving instrument they may not have considered.

05/23/2016

Retirement means making decisions on housing, income, investments, health care and estate planning—many of which can be emotional and may require major life changes. The timing of all of these decisions and their interaction also requires careful planning.

The Harvard Press says in its recent article, "Older & Wiser: Powers of Attorney," that because of the complexity of these issues, many people seek professional assistance regarding retirement living and estate planning. While many of us are tempted to avoid uncomfortable decisions, careful planning can save you thousands of dollars and can help you avoid unnecessary guardianship or institutionalization.

Powers of attorney are documents executed by an individual, the "principal," to give another individual, the "attorney-in-fact," power to decide issues on the principal's behalf. The principal has the ability to define the scope of decision-making authority in the power of attorney document.

Based on how they're drafted, powers of attorney can become effective in different ways. A durable power of attorney must be executed while the principal is still competent. It will be immediately effective and stay in effect, even if the person becomes incapacitated. A springing power of attorney is different. It becomes effective when the person is no longer competent.

A durable power can be used without the consent of the individual but must be used to the person's benefit. The springing power lets the person creating the document keep control over his or her affairs as long as it is practical. Both of these types of documents may be revoked by the principal in writing.

Drafting and executing power of attorney documents is an individualized process that varies depending on the circumstances. So it's never a good idea to use a boilerplate form from the Internet that doesn't reflect the individual's needs and circumstances.

A properly drawn and executed power of attorney provides individuals peace of mind and assurance that their affairs in the future will be addressed appropriately. Contact a qualified estate planning attorney.

05/20/2016

"Although reverse mortgages have been available since 1987, they still only account for about 1 percent of the total mortgage industry."

Reverse mortgages, also known as Home Equity Conversion Mortgages (HECMs), are government-insured loans. These loans let qualified senior homeowners convert illiquid home equity into available tax-free cash.

The Fifty-Plus Advocate says in "Top ways to use a reverse mortgage" that when used properly, a reverse mortgage may be the solution to living an independent, fulfilling life. A reverse mortgage lets you retain full control and ownership of your home. You are still obligated to maintain the property and to pay real estate taxes and homeowner's insurance, but you can stay in your home for the rest of your life. You also can sell your home at any time without a penalty, and any profit from the sale after paying off the reverse mortgage belongs to you. In many instances, properties held in a trust or life estates are eligible.

For qualified borrowers, the unique aspect of a reverse mortgage is that you don't have to make a monthly mortgage payment. That's what's thought of as the "magic" of a reverse mortgage. You can elect to receive a lump sum of cash, a monthly check for life, or a line of credit to be used if needed—all with no monthly payment for as long as you live in the home.

In addition, your home doesn't have to be free and clear, which can help seniors with a mortgage who are struggling to make the required monthly payment—impacting their quality of life. A reverse mortgage allows you to see a significant increase in monthly cash flow, which can reduce financial stress. However, even if you don't need cash or a monthly tax-free income, a reverse mortgage can be used as an estate-planning tool to protect against unexpected life events and to prepare you for the unknown.

This isn't for everyone. There are strict guidelines and protections. Speak with a qualified estate planning attorney.

05/19/2016

"When Prince died at the age of 57, he left behind a vast estate estimated to be worth at least $50 million, but no will to sort any of it out."

By now you've seen and heard the news of the musician's sudden death. You also now are aware that the Minnesotan failed to take time out from the concerts, recording, and songwriting to do his estate planning.

Your will acts as your advocate when dividing up your estate among loved ones. It's the set of instructions they will use.

Prince's situation, unfortunately, isn't that unusual: 55% of American adults don't have a will prepared, according an April 30 story on the "Today" show. A recent estate planning survey found that most of the respondents said they were too busy to create a will or else they believe estate planning is too complex and too expensive to deal with.

Here are a few answers to some basic questions:

Who needs a will? Everybody needs a will, even if you are not wealthy. Regardless of net worth, a will can clean things up and get your estate organized so your family doesn't have to fight over it.

How can you get a legally binding and quality will? Talk with a qualified estate planning attorney.

While the "back of a napkin" might work, you really do get what you pay for when it comes to estate planning documents.

05/18/2016

"Parents considering adoption should consider advance planning for a range of financial issues unique to the process and the child they hope to bring into their home."

According to the U.S. Department of Health and Human Services, the costs of adopting can be anywhere from a few hundred dollars to more than $40,000, depending on the form of adoption you select.

Biz Times' recent article, "Getting your finances ready for adoption," says that in order to get your finances ready for adoption, you have to do your homework and be certain the price and processing work of adoption won't wipe out your plans for essential financial goals like retirement, saving for your future child's education, and higher daily living expenses with a new family. Begin with these tips:

Examine your finances first. Work with qualified financial or tax professionals to review if you will be able to manage adoption costs from savings or grants you don't have to pay back. Starting a family is a major overall financial commitment—no matter what strategy you choose to build yours.

Understand the tax benefits of adoption. The federal government has tax breaks for adoption, but make sure you study and follow the rules. The IRS says that tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance. The credit's nonrefundable, so it's limited to one's tax liability for the year. Any credit in excess of tax liability can be carried forward for up to five years. In addition, adoptions of special needs children may qualify for special tax treatment.

Look into workplace benefits. A recent study showed that about 12% of U.S. employers offered a financial adoption benefit in 1990, compared to 52% now. See if your employer offers adoption benefits and factor those benefits into your overall financial plan.

Gauge your legal costs. This is a legal process, and based on the type of adoption process you pursue, you'll need to consult with an attorney to make sure your application is in order and your rights are protected.

Networking and education. A huge leg up on the entire process is getting involved with support and planning groups for parents of adopted kids and those who are planning to adopt.

Sound financial planning to support your adoption process will help give your new family the best possible start.